This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Canadian consumers are heading into the biggest shopping season of the year carrying a record $1.51 trillion in debt, according to credit scoring agency Equifax Canada.

However, the agency said it sees no cause for alarm as consumers are still doing a good job of carrying their debt load.

“The economic environment, especially in North America, is a lot more hopeful. There are still some areas that need to improve. But interest rates are still in check. And no-one expects them to go up fast,” Regina Malina, senior director of decision insights at Equifax Canada, said in a telephone interview.

The national debt load rose 7.4 per cent in the three months ended Sept. 30 compared to the same period a year earlier, according to the agency’s National Consumer Credit Trends Report.

The average debt held by Canadians, excluding mortgages, was $20,891 per person at the end of September, Equifax said in the report to be released Wednesday.

Article Continued Below

“Following a frenzied start to the festive shopping season with more to come in the countdown to Christmas, we can expect the consumer debt to rise even further,” Malina said in a statement.

Auto loans and installment loans drove most of the year-over-year increases, up 6.8 per cent and 5.8 per cent respectively, Equifax said. Installment loans are loans with fixed monthly payments. That can include loans used to pay for cars, furniture or home renovations.

Despite the increasing debt load, the national 90-plus day delinquency rate continued its downward trend reaching its lowest level since 2008 at 1.10 per cent, Equifax said.

“While the debt numbers are worrisome, it’s certainly positive to see delinquency and bankruptcy rates inch down each quarter,” Malina said.

Toronto has the highest delinquency rate, at 1.4 per cent, partly because it has a higher-than-average unemployment rate, the agency also said.

The city attracts many young people and new immigrants who take longer to find jobs. Toronto also creates more jobs, which may be why its delinquency rate has been falling the fastest since the recession.

“That’s what’s noteworthy,” Malina said.

Consumer demand for new credit was driven mainly by national credit card and auto credit inquiries.

Regionally, demand for credit in the West, where the oil boom fuelled faster economic growth, has increased for six consecutive quarters, while activity in the eastern provinces, which have been hurt by a decline in manufacturing, continues to slow down.

Canadians’ household debt loads have been rising since 2008, fuelled in part by record-low interest rates aimed at kick-starting a struggling economy after the U.S. financial crisis sparked the worst economic downturn since the Great Depression of the 1930s.

The increase — particularly in mortgage debt — has worried policy makers, who fear some households may be unable to withstand the eventual rise in interest rates that will come as the economy improves.

Bank of Canada Governor Stephen Poloz said in November that he continues to believe the ratio of household debt-to-disposable income, though at historic highs, will gradually decrease.

Canadians owed $1.63 for every $1 earned in the third quarter of this year.

The bank sets the country’s trend-setting interest rate, which has been at an ultra-low 1 per cent level since September 2010.

The bank has resisted calls to raise interest rates to subdue borrowing saying it could lead to higher unemployment and core inflation.

Equifax uses data from 25 million files on consumer credit history, including national credit cards, loans and mortgages, in compiling the report.

More from the Toronto Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com